Erlanger CEO salaries keep climbing

Erlanger CEO salaries keep climbing

February 24th, 2013 by Kate Harrison Belz in Local Regional News

Chattanooga's Erlanger Hospital is seen in this aerial file photo.

Photo by Doug Strickland/Times Free Press.

CEO SALARIES

Erlanger's CEO salaries have increased steadily over the last 20 years.

• Charlesetta Woodard-Thompson

Interim CEO -- December 2011-Current

Salary: $486,737

• Jim Brexler

CEO -- December 2003-December 2011

Salary: $550,000

Severance: $728,000 over 15 months

• Dennis Pettigrew

Erlanger CFO -- September 1997-March 1998; COO -- March 1998-October 1998; CEO -- October 1998-February 2003

Salary: $400,000

Severance: $131,000 (awarded in settlement of lawsuit seeking $380,000)

• Sylvester "Skip" Reeder

CEO -- November 1994-March 1998

Salary: $322,107

Severance: $516,000 over two years

Erlanger trustees believe they will pay their newly named CEO more than the half-million dollar salary paid to his predecessor, as hospital executives' pay continues to rise across the country.

After naming Kevin Spiegel as the public hospital's new CEO on Monday, Erlanger board members have spent the week negotiating contract details with him.

Spiegel now is CEO and senior vice president at Methodist Le Bonheur Healthcare in Memphis.

Erlanger's trustees are expected to vote next week on a contract with Spiegel.

Board member Kim White, chairwoman of the management and board evaluation committee, said the hospital hired an independent compensation consultant, Sullivan, Cotter and Associates, early in the search process to help evaluate the range of components involved in the CEO pay scale.

While White and other hospital officials did not release an estimated figure, they said the salary range was between $600,000 and $800,000, and that they would aim toward the midrange.

White acknowledges the six-figure salary ranges are eye-popping for many locals, but she says those pay levels are standard for staying competitive in a complicated industry.

"It can be difficult for the public to understand, but we're talking about a half-billion-dollar company, a very complex company with a lot of moving parts," she said. "With 4,500 employees and $82 million in uncompensated care, the expertise of this person is so important."

Susan O'Hare, senior vice president of Integrated Healthcare Strategies, a consulting firm which advises on compensation, said the factors that go into chief executive pay usually include the size of the organization, its revenue and the complexities of its operation.

Erlanger's demands, she said, are elaborate.

"It is a multihospital system. It is a teaching hospital. It is the regional tertiary care center, a Level 1 trauma center. It is a complicated health system -- and it provides indigent care. Plus, having a publicly appointed board adds to the challenges," said O'Hare, a former Erlanger executive herself.

She said that besides base salary, negotiations likely involve incentive-based compensation, a benefits package and supplemental retirement and severance packages.

The committee negotiating Spiegel's contract also will have to consider Spiegel's background and how much he is paid at Methodist.

A representative with Methodist, a private, nonprofit system, said Friday that details of Spiegel's contract are confidential.

But tax forms from 2010, the latest year available, show that Spiegel earned a base salary of $355,730. Additional compensation, bonuses and benefits boosted his total compensation package to $560,974 that year.

RISING SALARIES

Despite the recession, salary ranges for hospital executives across the county have risen in the last several years, according to consulting groups that track such data.

In a 2012 survey of manager and executive compensation in hospitals and health systems, Sullivan, Cotter and Associates found that base salaries increased on average by 2.8 and 2.5 percent, respectively, from the previous year.

"It is rising at a slower rate than it has risen since 2008," O'Hare said. "However, the complexity of health care organizations across the country is increasing. We're seeing a lot of mergers and acquisitions. We're seeing the need for very highly skilled talent in organizations. People are competing for the best talent out there."

Erlanger's two most recent CEOs were paid at least $100,000 more than their predecessors.

Jim Brexler, CEO from 2003 to 2011, was being paid at least $550,000 when he left.

Dennis Pettigrew, who was CEO for about five years before that, made about $430,000 annually, including benefits, newspaper archives show. Before him, former CEO Sylvester "Skip" Reeder made at least $322,107 annually.

All three CEOs were given six-figure severance packages.

Erlanger's interim CEO, Charlesetta Woodard-Thompson, is making about $486,737.

Memorial Health Care System's top executive, James Hobson, makes a base salary of $534,481, and his "other compensation" is listed at $76,095, according to the hospital's most recent tax fillings. That is up from his $445,421 salary in 2010, according to newspaper archives.

Parkridge Medical Center, which is a for-profit hospital, does not disclose its salaries and benefits.

As health care faces sweeping changes, a hospital CEO's shifting job description makes for even more willingness to boost executive salaries, White said.

"We're very bullish on Spiegel and what he can do as we face all of these changes. We want to pay him for his experience, and what he's bringing to the table."